-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VBoQeBJXTjNdxZn+OilAL2CJRiKV4Twnl59EGXsG9/TgSfQ1rzxKoQ+aeGgVjQ+W kln0/scxgCdttwf8WjvcKg== 0000705752-97-000012.txt : 19971113 0000705752-97-000012.hdr.sgml : 19971113 ACCESSION NUMBER: 0000705752-97-000012 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971113 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONAL PROPERTY INVESTORS 7 CENTRAL INDEX KEY: 0000732439 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 133230613 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-13454 FILM NUMBER: 97716936 BUSINESS ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLAZA STREET 2: P O BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 4049169090 MAIL ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLAZA STREET 2: P O BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 10QSB 1 FORM 10-QSB--QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1997 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from.........to......... Commission file number 0-13454 NATIONAL PROPERTY INVESTORS 7 (Exact name of small business issuer as specified in its charter) California 13-3230613 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Insignia Financial Plaza Greenville, South Carolina 29602 (Address of principal executive offices) (864) 239-1000 (Issuer's telephone number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports ), and (2) has been subject to such filing requirements for the past 90 days. Yes X . No . PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS a) NATIONAL PROPERTY INVESTORS 7 CONSOLIDATED BALANCE SHEET (Unaudited) (in thousands, except unit data) September 30, 1997 Assets Cash and cash equivalents $ 4,289 Escrow for taxes and insurance 318 Restricted escrows 662 Other assets 857 Investment properties: Land $ 3,738 Buildings and related personal property 41,597 45,335 Less accumulated depreciation (23,640) 21,695 $ 27,821 Liabilities and Partners' Capital (Deficit) Liabilities Accounts payable and accrued expenses $ 474 Tenants' security deposits 133 Mortgage notes payable 20,292 Partners' Capital (Deficit): General partner's $ (233) Limited partners' (60,517 units issued and outstanding) 7,155 6,922 $ 27,821 See Accompanying Notes to Consolidated Financial Statements b) NATIONAL PROPERTY INVESTORS 7 CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data) Three Months Ended Nine Months Ended September 30, September 30, 1997 1996 1997 1996 Revenues: Rental income $ 1,777 $ 1,707 $ 5,265 $ 5,201 Other income 116 121 334 289 Total revenues 1,893 1,828 5,599 5,490 Expenses: Operating 603 559 1,745 1,696 General and administrative 62 89 198 264 Maintenance 401 238 775 683 Depreciation 428 425 1,268 1,254 Interest 411 426 1,232 1,195 Property taxes 97 102 305 311 Total expenses 2,002 1,839 5,523 5,403 Net income (loss) $ (109) $ (11) $ 76 $ 87 Net income (loss) allocated to general partner (1%) $ (1) $ -- $ 1 $ 1 Net income (loss) allocated to limited partners (99%) (108) (11) 75 86 $ (109) $ (11) $ 76 $ 87 Net income (loss) per limited partnership unit $ (1.79) $ (.18) $ 1.24 $ 1.42 See Accompanying Notes to Consolidated Financial Statements c) NATIONAL PROPERTY INVESTORS 7 CONSOLIDATED STATEMENT OF PARTNERS' CAPITAL (DEFICIT) (Unaudited) (in thousands, except unit data) Limited Partnership General Limited Units Partner's Partners' Total Original capital contributions 60,517 $ 1 $ 30,259 $ 30,260 Partners' (deficit) capital at December 31, 1996 60,517 $ (234) $ 7,080 $ 6,846 Net income for the nine months ended September 30, 1997 -- 1 75 76 Partners' (deficit) capital at September 30, 1997 60,517 $ (233) $ 7,155 $ 6,922 See Accompanying Notes to Consolidated Financial Statements d) NATIONAL PROPERTY INVESTORS 7 CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) Nine Months Ended September 30, 1997 1996 Cash flows from operating activities: Net income $ 76 $ 87 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 1,268 1,254 Amortization of loan costs 84 28 Change in accounts: Escrow for taxes and insurance (263) 62 Other assets 72 115 Accounts payable and accrued expenses 31 312 Tenants' security deposit liabilities (16) (19) Net cash provided by operating activities 1,252 1,839 Cash flows from investing activities: Restricted escrow deposits (226) (250) Restricted escrow withdrawals 133 18 Property improvements and replacements (312) (259) Increase in restricted cash -- (403) Net cash used in investing activities (405) (894) Cash flows from financing activities: Payments on mortgage notes payable (25) (225) Loan costs paid (49) (180) Repayment of mortgage note payable -- (1,926) Proceeds from refinancing -- 5,000 Distributions to partners (1,955) -- Net cash (used in) provided by financing activities (2,029) 2,669 Net (decrease) increase in cash and cash equivalents (1,182) 3,614 Cash and cash equivalents at beginning of period 5,471 2,277 Cash and cash equivalents at end of period $ 4,289 $ 5,891 Supplemental information: Cash paid for interest $ 1,149 $ 1,089 See Accompanying Notes to Consolidated Financial Statements e) NATIONAL PROPERTY INVESTORS 7 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE A - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements of National Property Investors 7 (the "Partnership") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete consolidated financial statements. In the opinion of NPI Equity Investments, Inc., (the "Managing General Partner" or "NPI Equity"), all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended September 30, 1997, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1997. For further information, refer to the consolidated financial statements and footnotes thereto included in the Partnership's annual report on Form 10-KSB for the year ended December 31, 1996. Certain reclassifications have been made to the 1996 information to conform to the 1997 presentation. NOTE B - TRANSACTIONS WITH AFFILIATED PARTIES The Partnership has no employees and is dependent on the Managing General Partner and its affiliates for the management and administration of all partnership activities. The Partnership Agreement provides for payments to affiliates for services and as reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. Pursuant to a series of transactions which closed during 1996, affiliates of Insignia Financial Group, Inc. ("Insignia") acquired all of the issued and outstanding shares of stock of NPI Equity and National Property Investors, Inc. ("NPI"). NPI Equity is a wholly-owned subsidiary of NPI. In connection with these transactions, affiliates of Insignia appointed new officers and directors of NPI Equity and NPI. The following transactions with affiliates of Insignia, NPI, and affiliates of NPI were incurred in the nine month periods ended September 30, 1997 and 1996: For the Nine Months Ended September 30, (in thousands) 1997 1996 Property management fees (included in operating expenses) $273 $266 Reimbursement for services of affiliates, including approximately $5,000 and $7,000 of construction oversight reimbursements in 1997 and 1996, respectively (included in general and administrative expenses and maintenance expenses) 137 164 During the nine months ended September 30, 1996, the Partnership paid approximately $52,000 to affiliates of the Managing General Partner for expense reimbursements and brokerage fees incurred in connection with the July 12, 1996, refinancing of the Northwoods Apartments (see "Note C"). These charges have been capitalized as loan costs, and will be amortized over the life of the loan. For the period of January 19, 1996 to August 31, 1997, the Partnership insured its properties under a master policy through an agency and insurer unaffiliated with the Managing General Partner. An affiliate of the Managing General Partner acquired, in the acquisition of a business, certain financial obligations from an insurance agency which was later acquired by the agent who placed the master policy. The agent assumed the financial obligations to the affiliate of the Managing General Partner who received payments on these obligations from the agent. The amount of the Partnership's insurance premiums accruing to the benefit of the affiliate of the Managing General Partner by virtue of the agent's obligations is not significant. NOTE C - MORTGAGE NOTES PAYABLE On July 12, 1996, the Partnership refinanced the mortgage encumbering Northwoods Apartments. The refinancing replaced indebtedness on Northwoods in the amount of approximately $1,926,000. The debt refinanced carried a stated interest rate of 9.4% and was scheduled to mature, after an extension, on July 1, 1996. The lender subsequently agreed to extend the maturity date to November 15, 1996 and the interest rate was changed to 2.5% plus the LIBOR rate. On November 13, 1996, the Partnership refinanced this new mortgage encumbering Northwoods Apartments. The new mortgage indebtedness of $5,000,000 carries a stated interest rate of 7.33%. The loan requires interest-only payments with the principal balance maturing on November 1, 2003. On November 13, 1996, the Partnership refinanced the mortgage encumbering Patchen Place Apartments. The refinancing replaced indebtedness on Patchen Place in the amount of approximately $2,802,000. The refinancing replaced the existing indebtedness which carried an interest rate of 7% and had a maturity date of November 2013. The new mortgage indebtedness of $3,000,000 carries a stated interest rate of 7.33%. The loan requires interest-only payments with the principal balance maturing on November 1, 2003. On November 13, 1996, the Partnership refinanced the mortgage encumbering South Point Apartments. The refinancing replaced indebtedness on South Point in the amount of approximately $4,165,000. The refinancing replaced the existing indebtedness which carried an interest rate of 7.5% and had a maturity date of September 2021. The new mortgage indebtedness of $4,600,000 carries a stated interest rate of 7.33%. The loan requires interest-only payments with the principal balance maturing on November 1, 2003. On November 13, 1996, the Partnership refinanced the mortgage encumbering Fairway View II Apartments. The refinancing replaced indebtedness on Fairway View II in the amount of approximately $5,661,000. The refinancing replaced the existing indebtedness which carried an interest rate of 7.5% and had a maturity date of July 2020. The new mortgage indebtedness of $4,200,000 carries a stated interest rate of 7.33%. The loan requires interest-only payments with the principal balance maturing on November 1, 2003. NOTE D - SUBSEQUENT EVENT On October 2, 1997, the Partnership distributed approximately $2,000,000 to the partners. The limited partners received approximately $1,980,000 ($32.71 per limited partnership unit) and the general partner received approximately $20,000. ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The Partnership's investment properties consist of five apartment complexes. The following table sets forth the average occupancy of the properties for each of the nine month periods ended September 30, 1997 and 1996: Average Occupancy 1997 1996 Fairway View II Apartments Baton Rouge, Louisiana 94% 96% Northwoods Apartments Pensacola, Florida 95% 96% Patchen Place Apartments Lexington, Kentucky 88% 93% The Pines Apartments Roanoke, Virginia 96% 98% South Point Apartments Durham, North Carolina 92% 90% The Managing General Partner attributes the decrease in occupancy at Patchen Place Apartments to a soft market caused by increased competition as a result of newly constructed units. In addition, Patchen Place completed needed maintenance in which the Managing General Partner anticipates will create an increase in occupancy. The Partnership's net income for the nine month period ended September 30, 1997, was approximately $76,000 compared to net income of approximately $87,000 for the nine month period ended September 30, 1996. The Partnership's net loss for the three months ended September 30, 1997, was approximately $109,000 compared to a net loss of approximately $11,000 for the three months ended September 30, 1996. The decrease in net income is primarily due to an increase in maintenance expense. The increase in maintenance expense is due to an exterior rehabilitation project at Fairway View II and interior painting at South Point Apartments. Included in maintenance expense for the period ended September 30, 1997, is approximately $248,000 of major repairs and maintenance comprised of exterior building repairs, exterior painting, parking lot repairs, and swimming pool repairs. For the nine months ended September 30, 1996, maintenance expense included approximately $219,000 of major repairs and maintenance comprised of expenses related to the completion of repair work in 1996 due to a fire at Fairway View II in 1995, major landscaping, and gutter repairs. The decrease in net income is partially offset by a decrease in general and administrative expense and an increase in other income. The decrease in general and administrative expense is due to a decrease in expense reimbursements to affiliates in 1997. Increased expense reimbursements in 1996 were attributable to the combined transition efforts of the Greenville, South Carolina, and Atlanta, Georgia, administrative offices during the year-end close, preparation of the 1995 10-K and tax return (including the limited partner K-1s), filing of the first two quarterly reports and transition of asset management responsibilities to the new administration. The increase in other income is due to an increase in interest-bearing reserves, an increase in tenant charges at Northwoods Apartments and an increase in corporate unit income at Patchen Place Apartments. As part of the ongoing business plan of the Partnership, the Managing General Partner monitors the rental market environment of its investment properties to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expense. As part of this plan, the Managing General Partner attempts to protect the Partnership from the burden of inflation-related increases in expenses by increasing rents and maintaining a high overall occupancy level. However, due to changing market conditions, which can result in the use of rental concessions and rental reductions to offset softening market conditions, there is no guarantee that the Managing General Partner will be able to sustain such a plan. At September 30, 1997, the Partnership had cash and cash equivalents of approximately $4,289,000 compared to approximately $5,891,000 at September 30, 1996. Net cash provided by operating activities decreased primarily as a result of an increase in escrow deposits and a decrease in accounts payable and accrued expenses. Escrow deposits increased due to the timing of tax and insurance payments. Accounts payable and accrued expenses decreased due to the timing of payments to vendors. Net cash used in investing activities decreased due to a decrease in deposits to the restricted cash balances and an increase in restricted escrow withdrawals. The change from net cash provided by financing activities to net cash used in financing activities is partially due to the refinancing of Northwoods Apartments in July 1996. In addition, the Partnership made a distribution in January 1997, that was accrued at December 31, 1996. The Managing General Partner has extended to the Partnership a credit line of up to $500,000. At the present time, the Partnership has no outstanding amounts due under this line of credit. Based on present plans, management does not anticipate the need to borrow in the near future. Other than cash and cash equivalents, the line of credit is the Partnership's only unused source of liquidity. The sufficiency of existing liquid assets to meet future liquidity and capital expenditure requirements is directly related to the level of capital expenditures required at the properties to adequately maintain the physical assets and other operating needs of the Partnership. The mortgage indebtedness of approximately $20,292,000 is amortized over varying periods with required balloon payments ranging from February 1, 2001 to November 1, 2003, at which time the properties will either be refinanced or sold. No cash distributions were paid in 1996, although a distribution was declared and accrued at December 31, 1996. In January 1997, the Partnership distributed the accrued amount of approximately $1,960,000 to the partners. Approximately $1,935,000 ($31.97 per limited partnership unit) was distributed to the limited partners, approximately $20,000 was distributed to the general partner and the remaining approximately $5,000 will be used to pay state withholding taxes on behalf of the limited partners when the year end tax returns are filed. The distributions originated from refinancing proceeds of Fairway View II, Patchen Place, Northwoods I & II, and South Point, of approximately $1,561,000, and the remaining amount originated from operations of approximately $399,000. On October 2, 1997, the Partnership distributed approximately $2,000,000 to the partners. The limited partners received approximately $1,980,000 ($32.71 per limited partnership unit) and the general partner received approximately $20,000. PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits: Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report. b) Reports on Form 8-K: None were filed during the quarter ended September 30, 1997. SIGNATURES In accordance with the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NATIONAL PROPERTY INVESTORS 7 By: NPI EQUITY INVESTMENTS, INC. MANAGING GENERAL PARTNER By: /s/William H. Jarrard, Jr. William H. Jarrard, Jr. President and Director By: /s/Ronald Uretta Ronald Uretta Treasurer (Principal Financial Officer and Principal Accounting Officer) Date: November 13, 1997 EX-27 2
5 This schedule contains summary financial information extracted from National Property Investors 7 Third Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000732439 NATIONAL PROPERTY INVESTORS 7 1,000 9-MOS DEC-31-1997 SEP-30-1997 4,289 0 0 0 0 0 45,335 23,640 27,821 0 20,292 0 0 0 6,922 27,821 0 5,599 0 0 5,523 0 1,232 0 0 0 0 0 0 76 1.24 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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